Why building the wall will increase drug crime

Thomas DiLorenzo

One of the primary reasons given by the Trump administration for building a wall on the southern border with Mexico is to reduce the flow of illicit drugs — and drug gangs — into the U.S. This in turn will supposedly reduce the violence and crime associated with the illicit drug trade. Such optimism flies in the face of the past 45 years of experience.

The iron laws of supply and demand explain why this "battle" in the war on drugs, like so many others, is doomed to fail. Whenever the government announces a major victory in its war on drugs, with television images of huge quantities of illegal, confiscated drugs and drug kingpins perp-walked to prison, the immediate effect is a reduction in the supply of illegal drugs on American streets. So far, so good. That reduced supply results in an increased price of the drugs. Better yet, you might say. That will reduce drug consumption even further.

Not so fast. Increased drug prices also mean increased profits to drug dealers. Since the kind of drugs we are talking about tend to be addictive, the demand for them is "inelastic" in the language of economics. This means that there is very little reduction in consumption when prices go up. Consequently, although drug dealers may lose a few sales, the higher price per sale more than makes up for it in terms of increased revenue. Being a drug dealer will become even more profitable.

The increased profits will lure even more people into the business of dealing illegal drugs since the temptation to pocket vast riches will be even greater. By hook or crook they will find a way to get the drugs onto American streets. There's too much (more) money involved to not expect this. This is why America has been losing the war on drugs year in and year out for most of the past half century: In the war on drugs, success breeds failure.

The wall on the southern border will have a similar effect. To the extent that it does make it more difficult and costly to import illegal drugs into the U.S., all of the above-described effects will be set in motion. Reduced supply (initially) will cause higher drug prices on the street. The higher prices will increase the supply of drugs, the population of drug gangsters and drug-related violence as drug gangs battle it out for an ever-bigger pot of spoils.

One should also expect a spike in thefts, break-ins and other property crimes. Higher prices for illegal drugs have always been a cause of such crimes as some segment of the addicted population steals to support its habits.

Another thing we have learned from the war on drugs is that the higher prices caused by drug prohibition have led to ever more potent drugs. There is an economic reason for this. It is called the "Alchian-Allen Effect," named after two UCLA economists, Armen Alchian and William Allen. It goes like this: If a harder drug like cocaine sells for, say, $10 for a certain quantity, and a softer drug like pot sells for $5 for a similar quantity, the ratio of prices is 2 to 1. The hard stuff is twice as expensive. With a reduction of supply (caused by the wall, for instance) that increases the price of both by say, $5, the prices are now $15 for cocaine and $10 for pot. The price ratio is now 1.5 to 1. Cocaine has become relatively cheaper, which will induce many people to switch to the harder drug to get more of a "buzz" for their money.

For these reasons the Trumpian wall is likely to lead to more drugs, more drug-related violence, and more addiction to increasingly more potent, illegal drugs.

Thomas DiLorenzo is professor of economics at Loyola University Maryland. His email is tdilorenzo@loyola.edu.